Eli Lilly & Co. (NYSE:LLY)

Current Ratio

The current ratio exhibits moderate fluctuations over the observed periods, ranging from a low of 0.94 to a high of 1.42. Initially, there is a gradual increase from 1.11 in the first quarter of 2020 to a peak of 1.42 in the first quarter of 2021, indicating improved short-term liquidity during this period. This is followed by a decline and a series of oscillations, with values mostly between 1.05 and 1.30 up until the end of 2023. In early 2024, the ratio demonstrates some recovery, reaching 1.37 in the first quarter of 2025, suggesting an overall stable but slightly improving ability to cover short-term liabilities with current assets over the timeframe.

Quick Ratio

The quick ratio shows a similar pattern of fluctuations but remains consistently below the current ratio, reflecting a lower level of liquid assets relative to current liabilities. Starting at 0.64 in the first quarter of 2020, it improves to a high of 0.85 by the end of 2020, indicating strengthened liquidity excluding inventories. After this point, there is a general downward trend with intermittent rebounds. Notably, the ratio dips noticeably from a peak of 0.80 at the end of 2021 to lows near 0.52-0.58 throughout late 2023 and early 2024. The ratio stays below 0.60 in most recent quarters, which may suggest tighter liquid asset positions when excluding inventory components.

Cash Ratio

The cash ratio remains the lowest among the liquidity measures and exhibits more pronounced volatility. Beginning at a modest 0.14 in early 2020, it rises to 0.30 by the third quarter of 2020, indicating a temporary strengthening of monetary cash or equivalents relative to current liabilities. However, this peak is followed by a declining trend, with the cash ratio mostly falling below 0.20 across the majority of the subsequent quarters. The ratio reaches a low point of 0.09 in the later part of the observation period (mid-2025). This reflects a conservative level of cash on hand compared to short-term obligations, which could suggest more reliance on other current assets for liquidity.

Summary

Overall, liquidity ratios demonstrate an initial improvement in 2020 followed by moderate fluctuations and some weakening in the latter periods, especially in more stringent liquidity measures like the quick and cash ratios. Despite some volatility, the current ratio remains around or above 1.0 in most quarters, indicating an ongoing ability to meet short-term obligations from current assets. Lower quick and cash ratios suggest the composition of current assets is weighted toward less liquid components, potentially inventory or receivables. These trends highlight the importance of monitoring the quality of current assets and cash availability to ensure sustainable liquidity management.

Current Assets

Over the observed period, current assets exhibited an overall increasing trend, beginning at approximately $13.99 billion and reaching around $49.85 billion by the last recorded quarter. Notable increases are observed particularly from early 2023 onwards, indicating substantial growth in the company's liquid resources and short-term asset base.

Current Liabilities

Current liabilities showed fluctuations with a general upward trajectory. Initially near $12.61 billion, they increased to $39.02 billion by the end of the period. There were periods of volatility, such as a notable rise between Q1 2021 and Q4 2021, followed by varying levels of increase and decrease, suggesting changes in short-term obligations or working capital management.

Current Ratio

The current ratio, which measures liquidity, fluctuated within a moderate range, mostly above 1.0, indicating the company generally maintained adequate short-term liquidity. Early values hovered between 1.11 and 1.42, with intermittent declines around mid-2022 and late 2023 where the ratio dipped close to or slightly below 1.0 (0.94 being the lowest). The ratio rebounded thereafter, ending at 1.28. These fluctuations represent shifts in the balance between current assets and liabilities but overall suggest stable liquidity.

Overall Analysis

The company has progressively increased its current assets substantially over the period, which may reflect enhanced cash reserves, inventory, or other short-term assets. Although current liabilities also rose, the current ratio's maintenance above 1.0 for most quarters signals continued capability to cover short-term obligations. The temporary dips in the current ratio, primarily in late 2023, warrant monitoring but do not indicate severe liquidity concerns given the ratio's recovery. The combination of growing current assets and a generally stable current ratio suggests a strengthening short-term financial position.

The financial data reveals notable fluctuations in total quick assets and current liabilities over the reported periods, which subsequently affect the company's quick ratio trend.

Total Quick Assets

Total quick assets generally show an upward trajectory from March 31, 2020, through December 31, 2025. Beginning at approximately 8,129,000 US$ thousands, there is an observable increase peaking above 20,751,600 US$ thousands by June 30, 2025. However, this growth is interspersed with periods of moderate decline or stagnation, notably around March 31, 2022, and December 31, 2022, before rising sharply again after March 31, 2023.

Current Liabilities

Current liabilities also exhibit a rising trend with greater volatility. The balance initiates around 12,610,200 US$ thousands at the end of Q1 2020 and peaks significantly at 39,019,900 US$ thousands by June 30, 2025. Several quarters experience sharp increases, such as between March 31, 2021, and June 30, 2021, and more profoundly from March 31, 2023, onward. Mid-period fluctuations occur, signaling potentially varying short-term obligations or liquidity management changes.

Quick Ratio

The quick ratio fluctuates within a range generally below 1.0, indicating that quick assets consistently fall short of covering current liabilities fully. Initially low at 0.64 in the first quarter of 2020, it improves to a high of 0.85 by December 31, 2020. Subsequently, the ratio declines, showing increased pressure on liquidity, especially notable after mid-2021. The downward trajectory intensifies from late 2022 through 2024, dropping to as low as 0.52 by December 31, 2023, and remaining below 0.60 thereafter, suggesting increasing difficulty in meeting short-term obligations with liquid assets.

Overall, the data reflects expanding asset and liability bases, with liabilities growing at a pace that outstrips the increase in quick assets, thereby exerting downward pressure on the quick ratio. This trend highlights growing liquidity risk if liabilities continue rising faster than liquid assets. It may warrant closer scrutiny of short-term financial strategy and asset-liability management going forward.

The analysis of the financial data over the observed periods reveals notable trends in key liquidity metrics. Total cash assets exhibit significant fluctuations, initially increasing from 1,777,400 thousand US dollars at the end of March 2020 to a peak of approximately 3,908,600 thousand US dollars by December 2020. However, a decline follows in early 2022, reaching a low near 2,211,800 thousand US dollars in December 2022, before regaining upward momentum and stabilizing around 3,546,000 thousand US dollars by June 2025.

Current liabilities demonstrate a generally upward trajectory over time, increasing from 12,610,200 thousand US dollars at the start of the period to a substantial 39,019,900 thousand US dollars by mid-2025. While there are intermittent periods of relative stability and slight decreases, the overall trend is a marked rise in liabilities, with particularly sharp increases seen in late 2023 through 2025.

The cash ratio, which measures liquidity by comparing total cash assets to current liabilities, exhibits a decreasing trend over the examined intervals. Initially, this ratio improves from 0.14 in March 2020 to a high of 0.3 in September 2020, reflecting an improved liquidity position. Following this peak, the ratio declines steadily, reaching a low of 0.09 by June 2025. This decline indicates a diminishing capacity to cover short-term liabilities using only cash assets, suggesting increased liquidity risk over time.

Total Cash Assets

Experience significant volatility with an initial strong increase through 2020, followed by a notable dip throughout 2022, and a recovery phase commencing in early 2023.

Current Liabilities

Show a consistent increase overall, with some periods of accelerated growth especially in the latter part of the timeline, reflecting a rising short-term obligation burden.

Cash Ratio

Peaks in 2020 but subsequently declines consistently until mid-2025, indicating a weakening of the firm's short-term liquidity buffer despite fluctuations in cash assets and liabilities.

Overall, the data suggest that while cash assets have recovered after periods of decline, the more rapid increase in current liabilities and the concomitant fall in the cash ratio point to increasing pressure on liquidity. This pattern may warrant closer monitoring of working capital management and possibly strategic interventions to strengthen short-term financial stability.